Qualcomm forecast more mass market smart phones

Expensive smart phones are the rage right now, but soon more affordable handsets could pave the way for smart phones for the masses.

Qualcomm Chief Executive Paul Jacobs said Wednesday that affordable smart phones and flexible data plans from wireless carriers will be among key factors fueling the San Diego company’s growth in the coming year.

Speaking at an analysts’ conference in New York, Jacobs and other Qualcomm executives gave an broad overview of the company’s prospects. It was generally a rosy outlook, with continued smart phone gains, as well as the rise of tablet computers and e-readers, creating strong demand for the company’s wireless chips.

Jacobs said as phone makers roll out smart phones at different price points and wireless carriers offer tiered data plans, owners of voice and text only “feature” phones will be able to trade up.

“We are going to see a tremendous amount of growth in the low and mid tier,” he said. “There is a huge number of people who have been buying feature phones who now want to have a smart phone.”

To date, top-of-the-line devices such as the Apple iPhone, which costs $600 without a subsidy, have dominated the smart phone market. Carriers typically sell these phones for substantially less when buyers sign a two-year voice and data contract.

But phone makers have begun to cast a wider net. The Sanyo Zio by Kyocera costs $250 at Cricket, a no-contract carrier that doesn’t subsidize handsets to a great degree. Sprint is selling the Zio for $99 with a contract.

Industry research firm Gartner predicts that shipments of smart phones priced under $300 will increase ninefold between 2009 and 2014, while shipments of smart phones priced above $300 will triple in the same time frame.

Qualcomm thinks it has an advantage in lower cost smart phones because it melds many functions, such as the modem, application processor and graphics processor, into one chipset. That helps phone makers keep costs down, according to Qualcomm.

Qualcomm also expects growth to come from tablets and other devices. Jacobs said the company is working with Dell, Lenovo, Hewlett-Packard, Acer and others. Qualcomm also supplies chips to the three top manufacturers of e-readers so users can download books over wireless networks.

Qualcomm said an e-reader using its Mirasol display technology — a full color screen that uses less power than liquid crystal displays — is expected to come to market in the first half of next year. The company predicts it will spend $975 million to build an additional manufacturing plant in Asia. The plant could be finished toward the end of next year.

Qualcomm also plans a new family of its Snapdragon applications processors sometime next year that would be more powerful than its current Snapdragon chips. The new line would include multi-mode technology to operate on both 3G and new 4G networks.

Finally, the company said it continues to explore options for its Flo TV service, including selling the wireless spectrum and shutting it down.